By Randy Tucker
The Cincinnati Enquirer
Kroger Co. cut profit forecasts for next year after reporting Tuesday that earnings before one-time charges were lower than expected in the third quarter.
The nation's largest supermarket chain blamed a weak economy and rising unemployment for the 6.6 percent decline in third-quarter profits to $263 million from $282 million last year.
Including one-time items, third-quarter earnings were $255 million, or 33 cents a share, compared with $133 million, or 16 cents a share last year, when results were dragged down by merger costs, store closings and energy costs.
Share earnings remained unchanged at 34 cents because Kroger had fewer shares outstanding in the past quarter, when it repurchased 13.3 million shares of common stock, the company said.
Total sales rose 2.8 percent to $11.7 billion in the third quarter. Total food store sales rose 2.7 percent as the supermarket chain cut prices to attract shoppers.
"Consumers remain cautious in their spending,'' Joseph Pichler, Kroger's chairman and CEO, said. "However, the price reductions Kroger has made in selected product categories ... have improved our competitive position.''
Kroger shares closed up 20 cents to $15.30 on the New York Stock Exchange.
Looking ahead, Kroger said it expects earnings in the current quarter to meet or slightly exceed profits in the fourth quarter last year of 47 cents a share. Analysts had been expecting Kroger to earn 49 cents a share in the fourth quarter, according to a poll by research firm Thomson First Call.
For 2003, Kroger said it expects earnings to be flat compared with 2002, and sales from existing stores are expected to be lower than previously estimated.
"The combination of a weak economy, rising unemployment, product cost deflation and continued aggressive competition has created a difficult operating environment,'' Mr. Pichler said. "It is not clear when consumer confidence will improve.''
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